[Featured Stock] LG Energy Solution Rises on Battery Joint Venture with Honda Japan

[Asia Economy Reporter Junho Hwang] LG Energy Solution is showing strong performance in the stock market on the 30th following news that it will establish a joint battery plant in the United States with Japanese automaker Honda.

As of 9:10 AM that day, LG Energy Solution's stock price rose 3.37% from the previous close to 475,000 KRW. The KOSPI index was up 0.85% at 2447.42, and the KOSPI 200 rose 0.68% to 318.49.

The rise in LG Energy Solution's stock price appears to reflect market expectations following the announcement of the joint battery plant with Honda, a Japanese automaker, in the U.S.

In the securities industry, it is analyzed that Korean battery companies, including LG Energy Solution, are becoming a foothold for other countries' automakers in the North American electric vehicle market.

Researcher Changhyun Jeon of Daishin Securities commented, "It is impressive that LG Energy Solution has entered the Japanese OEM vendor market, which has traditionally built a closed SCM centered on domestic companies." He added that due to the intensifying U.S.-China conflict, Chinese companies face difficulties entering the local market, and Japanese companies are making passive local investments, making Korean battery companies the virtually only alternative as cooperative partners in building the North American EV value chain.

Jeon said, "The establishment of the LG Energy Solution-Honda joint battery plant in the U.S. will be reflected in performance after 2025, so there will be no short-term upward revision of earnings estimates." He noted that the figures are estimated to be partially included within the existing shared capacity guidance. LG Energy Solution's capacity guidance is 540 GWh by 2025 (EV 520 GWh, Non-EV 20 GWh), with North American capacity estimated at 230 GWh.

On the 29th, LG Energy Solution announced that it will establish a joint battery plant with Japanese automaker Honda in the U.S. with a battery capacity of 40 GWh. The total investment is 5.1 trillion KRW, with LG Energy Solution investing 2.4 trillion KRW in cash (acquiring a 51% stake) by 2027 after establishment. The plant is expected to produce enough batteries to support 660,000 BEVs equipped with 60 kWh capacity batteries, with construction scheduled to begin in the second half of next year. Pouch battery cells and modules are expected to be mass-produced by 2025.

Honda aims to supply batteries for EVs of Honda and Acura (Honda's premium brand) through this plant, while LG Energy Solution is expected to diversify its portfolio and expand its dominance in the North American market through this joint venture.

Jeon noted, "Currently, most of Honda's EV models sold in the North American market are HEV models such as the Accord Hybrid and CR-V Hybrid, with battery vendors including BEC/Panasonic and cathode material vendors Tanaka/Nichia, all Japanese companies." He added, "The new capacity will be for BEV/PHEV models, and it is expected that cathode materials will likely be sourced mainly from LG Energy Solution's value chain rather than existing Japanese vendors."

The joint venture is also expected to benefit local material suppliers. The 40 GWh battery capacity requires about 68,000 tons of cathode material annually based on high-nickel content. Local material suppliers capable of entering the North American market include LG Chem and POSCO Chemical.

This content was produced with the assistance of AI translation services.